Related provisions for DISP App 1.4.12
61 - 80 of 325 items.
The Handbook primarily
contains provisions which apply to all firms or
to certain categories of firm.
However, a firm may apply for
a waiver or modification of rules in
certain circumstances as set out in SUP
8; or it may receive individual guidance on
the application of the rules,
as set out in SUP 9.
The FSA, in the course of its supervision of a firm,
may sometimes judge it necessary or desirable to impose additional requirements on a firm or
in some way amend or restrict the activities which the firm has permission to undertake. The guidance in this chapter describes when and
how the FSA will
seek to do this.
This chapter does not apply to:(1) a firm established in an EEA State other than the United Kingdom; passporting by such a firm in or into the United Kingdom is a matter for its Home State regulator although guidance is given in 4SUP 13A4 (Qualifying for authorisation under the Act);(2) other overseas firms (that is, overseas firms established outside the EEA); such firms are not entitled to passport into another EEA State and, where relevant, may need to obtain authorisation
This chapter gives guidance on Schedule 3 to the Act for a UK firm which wishes to exercise its EEA right and establish a branch in, or provide cross border services into, another EEA State. That is, when a UK firm wishes to establish its first branch in, or provide cross border services for the first time into, a particular EEA State.
In assessing, under SUP 12.4.2 R(2)1(a) and (b), whether an appointed representative or prospective appointed representative is solvent and otherwise 1suitable, a firm should determine, among other matters, whether the person is likely to be adversely influenced by its financial position in the conduct of the business for which the firm is responsible. This might arise, for example, if the person has cashflow problems and is not able to service its debts. Guidance for firms on
In assessing, under SUP 12.4.2 R (2)(b), whether an appointed representative or prospective appointed representative is otherwise 1suitable to act for the firm in that capacity, a firm should consider:(1) whether the person is fit and proper; guidance on the information that firms should take reasonable steps to obtain and verify is given in SUP 12 Annex 2; and(2) the fitness and propriety (including good character and competence) and financial standing of the controllers, directors,
(1) 3(a) MCOB 7.1 to MCOB 7.3, MCOB 7.5 and MCOB 7.6 (as modified by this section) apply to a firm where the home finance transaction is a lifetime mortgage.3(b) MCOB 7.1 to MCOB 7.3 (as modified by this section) apply to a firm where the home finance transaction is a home reversion plan, except that those provisions that by their nature are only relevant to regulated mortgage contracts do not apply to home reversion plans (see MCOB 9.1.2A G).3(2) The table in MCOB 9.6.2 R shows
Table of modified cross-references to other rules:
This table belongs to MCOB 9.6.1R.
Subject |
Rule or guidance |
Reference in rule or guidance |
To be read as a reference to: |
Application |
MCOB 7.1.4R |
MCOB 7.6.7R - MCOB 7.6.33G as modified by MCOB 9.8.5R - 9.8.9R |
|
Application |
MCOB 7.1.5R |
||
Information in more than one document |
MCOB 7.3.3R |
MCOB 7 |
|
Frequency of statements |
MCOB 7.5.6G |
MCOB 7.5.3R(2) |
MCOB 9.8.1R(2) |
Annual statement - additional content |
MCOB 7.5.9G |
MCOB 7.5.3R(2)(b) |
MCOB 9.8.1R |
Further advances |
MCOB 7.6.7R |
MCOB 5 |
MCOB 9.4 |
Further advances |
MCOB 7.6.10G |
MCOB 7.6.9R(10 |
MCOB 9.8.5R(1) |
Further advances |
MCOB 7.6.10G |
MCOB 5.6.34 |
MCOB 9.4.114R |
Further advances |
MCOB 7.6.11G |
MCOB 7.6.9R(3) and (4) |
MCOB 9.8.5R(3) |
Further advances |
MCOB 7.6.11G(2) |
MCOB 5.6.40R |
MCOB 9.4.37R |
Further advances |
MCOB 7.6.12G |
MCOB 7.6.9R(3) |
MCOB 9.8.5R(3) |
Further advances |
MCOB 7.6.13R |
MCOB 5.6.25R(2)(a) |
MCOB 9.4.24R(4)(a) |
Further advances |
MCOB 7.6.13R |
MCOB 7.6.9R(3)(b) |
MCOB 9.8.5R(3)(b) |
Further advances |
MCOB 7.6.14R |
MCOB 5 |
MCOB 9 |
Rate switches |
MCOB 7.6.20R |
MCOB 5 |
MCOB 9 |
Rate switches |
MCOB 7.6.20R |
MCOB 5 |
MCOB 9 |
Addition or removal of party to contract |
MCOB 7.6.22R |
MCOB 5 |
MCOB 9 |
Addition or removal of party to contract |
MCOB 7.6.25R |
MCOB 5 |
MCOB 9 |
Changes to payments |
MCOB 7.6.29R |
MCOB 7.6.28R |
|
Changes to payments |
MCOB 7.6.30R |
MCOB 7.6.28R |
MCOB 9.8.9R or MCOB 9.8.10R |
Use of illustrations |
MCOB 7.6.31R |
MCOB 7.6.28R |
|
Use of illustrations |
MCOB 7.6.31R |
MCOB 5 |
MCOB 9 |
Use of illustrations |
MCOB 7.6.32R |
MCOB 7.6.28R |
|
Use of illustrations |
MCOB 7.6.32R |
||
Simultaneous requests |
MCOB 7.6.33G |
||
Simultaneous requests |
MCOB 7.6.33G |
MCOB 5 |
MCOB 9 |
Table of rules in MCOB 7 replaced by rules in this chapter:
This table belongs to MCOB 9.6.1R.
Subject |
Rule or guidance |
Rule replaced by: |
Information at start of contract |
MCOB 7.4 |
MCOB 9.7 |
Content of statement |
MCOB 5.3R |
MCOB 9.8.1R |
Frequency of statements |
MCOB 7.5.5R |
MCOB 9.8.2R |
Event-driven information |
MCOB 7.6.1R |
MCOB 9.8.3R |
Release of additional borrowing |
MCOB 7.6.6G |
MCOB 9.8.4G |
Further advances |
MCOB 7.6.9R |
MCOB 9.8.5G |
Further advances |
MCOB 7.6.16R |
MCOB 9.8.7R |
Addition or removal of party to contract |
MCOB 7.6.27R |
MCOB 9.8.8R |
Changes to payments |
MCOB 7.6.28R |
The first activity (article 25A(1)) is referred to in this guidance as arranging (bringing about) regulated mortgage contracts. Various points arise:(1) It is not necessary for the potential borrower himself to be involved in making the arrangements.(2) This activity is carried on only if the arrangements bring about, or would bring about a regulated mortgage contract. This is because of the exclusion in article 26 (see PERG 4.5.4 G).(3) This activity therefore includes the activities
The second activity (article 25A(2)) is referred to in this guidance as making arrangements with a view to regulated mortgage contracts. This activity is different from article 25A(1)) because it requires a potential borrower to actively participate by utilising the arrangements to enter into a regulated mortgage contract. It does not require that the arrangements would bring about a regulated mortgage contract. Nor does it cover arrangements leading to contract variations. It
In the FSA's view, the crucial element of the exclusion in article 27 is the inclusion of the word "merely". When a publisher, broadcaster or Internet website operator goes beyond what is necessary for him to provide his service of publishing, broadcasting or otherwise facilitating the issue of promotions, he may well bring himself within the scope of article 25A(2). Further detailed guidance relating to the scope of the exclusion in article 27 is contained in PERG 8.32.6 G to
This guidance is based on the statutory instruments made as part of implementing the IMD in the United Kingdom. This legislation includes the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2003 (S.I. 2003/1476), which amends among others the Regulated Activities Order, the Financial Services and Markets Act 2000 (Appointed Representatives) Regulations 2001 (S.I. 2003/1217), the Non-Exempt Activities Order and the Business Order. Other legislation
Any person who carries on a regulated activity in the United Kingdom by way of business must either be an authorised person or exempt from the need for authorisation. Otherwise, the person commits a criminal offence and certain agreements may be unenforceable. PERG 2.2 (Authorisation and regulated activities) has further guidance on these consequences.2
An unauthorised person who intends to carry on activities connected with contracts of insurance will need to comply with section 21 of the Act (Restrictions on financial promotion). This guidance does not cover financial promotions that relate to contracts of insurance. Persons should refer to the general guidance on financial promotion in PERG 8 (Financial promotion and related activities). (See in particular PERG 8.17A (Financial promotions concerning insurance mediation activities)
The FSA anticipates that an application to modify the overall liquidity adequacy rule may be accompanied by an application to waive or modify other rules in BIPRU 12 (for example, the stress testing and contingency funding planrules in BIPRU 12.4). The FSA offers some guidance in this section on applications of this type.
The FSA recognises that a firm may be part of a wider group which manages its liquidity on a group-wide basis. A firm which considers that the statutory tests in section 148 of the Act are met may apply for an intra-group liquidity modification permitting it to rely on liquidity support from elsewhere in its group. Until a firm has such a modification it will need to meet the overall liquidity adequacy rule from its own liquidity resources. The effect of an intra-group liquidity
In relation to an incoming EEA firm or third country BIPRU firm, the overall liquidity adequacy rule provides that, for the purpose of complying with that rule, a firm may not, in relation to its UKbranch, include liquidity resources other than those which satisfy the conditions in BIPRU 12.2.3 R. Those conditions seek to ensure that a firm of this kind has a reserve of liquidity for operational purposes that is under the control of, and available for use by, that firm'sUKbranch.
An applicant for recognised
body status needs to demonstrate to the FSA that it is able to meet the recognition requirements and in the case
of a UK RIE, the MiFID implementing requirements1before a recognition
order can be made. Once it has been recognised, a recognised body has to comply with the recognition requirements and in the case of a UK
RIE, the MiFID implementing
requirements1at all times. (Guidance on
the recognition requirements applicable to UK
recognised bodies
At any time after making a formal
application, the applicant may make amendments to its rules, guidance or any
other part of its application submitted to the FSA. Any amendments or additional information are likely to be forwarded
by the FSA to the Director General of Fair Trading and the Treasury under
section 303 of the Act (Initial
report by Director) (see REC 5.1.5 G).
Where the FSA considers that it is unlikely to make a recognition
order, or to seek the
Treasury's approval, it will discuss its concerns with
the applicant as early as possible with a view to enabling the applicant to
make changes to its rules or guidance, or other parts of the application (see REC 5.2.7 G).
If the FSA decides
that it will not make a recognition order,
it will follow the procedure set out in section 298 of the Act (Directions
and revocation: procedure) and described
(1) 3(a) 3Subject to (c),MCOB 4.1 to MCOB 4.6 and MCOB 4.8 (with the modifications stated in MCOB 8.3.3 R and MCOB 8.3.4 R) apply to a firm where the home finance transaction is a lifetime mortgage.33(b) MCOB 4.1 to MCOB 4.4 and MCOB 4.8 (with the modifications stated in MCOB 8.3.3 R and MCOB 8.3.4 R) apply to a firm where the home finance transaction is a home reversion plan, except for those provisions that by their nature are only relevant to regulated mortgage contracts.3(2)
Table of modified cross-references to other rules: This table belongs to MCOB 8.3.1 R.
Subject |
Rule or guidance |
Reference in rule or guidance |
To be read as a reference to: |
Advice or information from the whole market |
MCOB 4.3.4R(2) |
MCOB 4.7.2R |
MCOB 8.5.2R |
Initial disclosure requirement (for equity release transactions only)3 3 |
MCOB 4.4.1R(1)(c) and (3) |
MCOB 4 Ann 1R |
MCOB 8 Ann 1R |
Initial disclosure requirements |
MCOB 4.4.3G |
MCOB 4 |
|
Initial disclosure requirements where initial contact is by telephone (for equity release transactions only)3 3 |
|||
Additional disclosure for distance mortgage mediation contracts |
MCOB 4.5 |
||
Non-advised sales |
MCOB 4.8.6G |
MCOB 4.7 |
MCOB 8.5 |
The purpose of this guidance is two fold:(1) to outline the restriction on financial promotion under section 21 of the Act (Restrictions on financial promotion) and the main exemptions from this restriction; and(2) to outline the main circumstances in which persons who are primarily involved in making or helping others to make financial promotions may be conducting regulated activities requiring authorisation or exemption themselves; this part of the guidance may also be of more
In particular, this guidance covers:(1) invitations and inducements (see PERG 8.4);(2) meaning of 'in the course of business' (see PERG 8.5);(3) meaning of 'communicate' (see PERG 8.6);(4) meaning of 'engage in investment activity' (see PERG 8.7);(5) meaning of 'having an effect in the United Kingdom' (see PERG 8.8);(6) circumstances where the restriction in section 21 does not apply (see PERG 8.9);(7) types of financial promotion, including:(a) meaning of 'real time financial
This guidance is issued under section 157 of the Act. It represents the FSA's views and does not bind the courts. For example, it would not bind the courts in an action for damages brought by a private person for breach of a rule (see section 150 of the Act (Actions for damages)), or in relation to the enforceability of a contract where there has been a breach of sections 19 (The general prohibition) or 21 (Restrictions on financial promotion) of the Act (see sections 26 to 30
(1) MCOB 5.1 to MCOB 5.5 (with the modifications stated in MCOB 9.3.2 R to MCOB 9.3.12 R) apply to a firm where the home finance transaction is an equity release transaction, except that those provisions that by their nature are only relevant to regulated mortgage contracts do not apply to home reversion plans (see MCOB 9.1.2A G).33(2) The table in MCOB 9.3.2 R shows how the relevant rules and guidance in MCOB 5 must be modified by replacing the cross-references with the relevant
Table of modified cross-references to other rules.
This table belongs to MCOB 9.3.1 R.
Subject |
Rule or guidance |
Reference in rule or guidance |
To be read as a reference to: |
Variations |
MCOB 5.1.3R(2) |
MCOB 7 |
|
Part of loan not an equity release transaction2 2 |
MCOB 5.1.9G |
MCOB 5.6.6R(2) |
MCOB 9.4.6R(2) |
Waiver of provisions |
MCOB 5.1.10G |
MCOB 5.6 |
MCOB 9.4. |
Purpose |
MCOB 5.2.1G |
MCOB 5 |
|
Applying for a lifetime mortgage2 2 |
MCOB 5.3.2G |
||
MCOB 5.4.24G |
MCOB 5.6.74R |
||
Issue of offer document in place of illustration |
MCOB 5.5.3G |
||
Customer's credit record |
MCOB 5.5.16R |
MCOB 5.5.15R(4) |
MCOB 9.3.12R(3) |
Table of rules in MCOB 5 replaced by rules in MCOB 9: This table belongs to MCOB 9.3.1R
Subject |
Rule(s) or guidance |
Rule(s) or guidance replaced by: |
Accuracy of the illustration |
||
Information that is not an illustration |
MCOB 5.4.14R |
MCOB 9.3.11R |
Providing anillustration |
MCOB 5.5.15R - |
MCOB 9.3.12R - |
Content ofillustration |
MCOB 5.6 |
MCOB 9.4 |
There is a general concern that the practice of companies issuing statements and giving briefings may involve a financial promotion. These arise sometimes as a result of requirements imposed by a listing authority or an exchange or market, PERG 8.4.14 G offers guidance on when such statements or briefings may amount to or involve an inducement to engage in investment activity. It indicates that whilst statements of fact alone will not be inducements, there may be circumstances
PERG 8.12.32 G contains detailed guidance on the exemption in article 20A. The exemption is capable of applying to financial promotions in a company statement or briefing where they are communicated through a webcast if the website is a regularly updated news or information service. For this to be the case, the website must be a service provided to persons who use it (so it must not, for example, simply be an advertising vehicle) and that service must be one of providing news
The reference to financial promotions which are permitted to be communicated relates, in the FSA's opinion, to something which is expressly permitted rather than simply not expressly prohibited. Article 67 itself does not specify any particular medium for communicating required or permitted material. So, it will be enough for the financial promotion to be part of a document which is itself required or permitted to be communicated (such as reports or financial statements). Market
Some of the other rules and guidance in the Handbook deal with the bearing of the Principles upon particular circumstances. However, since the Principles are also designed as a general statement of regulatory requirements applicable in new or unforeseen situations, and in situations in which there is no need for guidance, the FSA's other rules and guidance should not be viewed as exhausting the implications of the Principles themselves.
(1) This paragraph contains guidance on the inclusion of CIUs in a VaR model.(2) The FSA may allow all types of CIU to be included within the scope of a firm'sVaR model permission.(3) BIPRU 7.10 does not distinguish between specific risk and general market risk for positions in CIUs. Therefore even if specific risk is not otherwise included within the scope of a firm'sVaR model permission, a firm should be able to demonstrate that its VaR model captures specific risk.(4) A firm
This paragraph provides guidance on BIPRU 7.10.46R (3). Take as an example a VaR model based on a factor model or on a historical simulation model. The ability of the model to explain price variation could be demonstrated by a statistical comparison over the same period of time between actual price changes on the portfolio and the profit and loss impact of risk factors included within the model. A firm may wish to include an estimate of residual variation not explained by the
(1) This paragraph gives guidance on the backtesting calculation and reporting process in BIPRU 7.10.96R - BIPRU 7.10.104R.(2) Let the day on which the loss referred to in BIPRU 7.10.100R is made be day n. The value-at-risk measure for that day will be calculated on day n-1, or overnight between day n-1 and day n. Profit and loss figures are produced on day n+1, and backtesting also takes place on day n+1. The firm's supervisor should be notified of any backtesting exceptions
(1) This paragraph gives guidance on the process for excluding backtesting exceptions as referred to in BIPRU 7.10.103R.(2) The FSA will respond flexibly to backtesting exceptions. However, the FSA's starting assumption will be that a backtesting exception should be taken into account for the purpose of the calculation of plus factors. If the firm believes that a backtesting exception should not count for that purpose, then it should seek a variation of its VaR model permission
The regulated activity of dealing in investments as agent applies to specified transactions relating to any security or to any relevant investment (apart from rights under funeral plan contracts or rights to or interests in such rights). In addition, the activity is cut back by exclusions as follows.(1) An exclusion applies to certain transactions entered into by an agent who is not an authorised person which depend on him dealing with (or through) an authorised person. It does
3The exclusions in the Regulated Activities Order that relate to the various arranging activities are as follows.(1) Under article 26, arrangements that do not or would not bring about the transaction to which they relate are excluded from the arranging activities that relate to a particular transaction (see PERG 2.8.6G (1)) only. A person will bring about a transaction or a contract or plan variation only if his involvement in the chain of events leading to a transaction or contract
In certain circumstances, advice that takes the form of a regularly updated news or information service and advice which is given in one of a range of different media (for example, newspaper or television) is excluded from the regulated activities of:3(1) advising on investments;3(2) advising on regulated mortgage contracts;3(3) advising on a home reversion plan; and3(4) advising on a home purchase plan. and3See PERG 7 (Periodical publications: news services and broadcasts: applications
3Advice given by an unauthorised person in relation to a home finance transaction in the circumstances referred to in PERG 2.8.6AG (5)(a) or (b) (Arranging deals in investments and arranging a home finance transaction) is also excluded. In addition:(1) the following exclusions apply in specified circumstances where a person is advising on investments or advising on a home finance transaction:(a) while acting as trustee or personal representative (see PERG 2.9.3 G);(b) in connection
Ordinary telephone directory entries which merely list names and contact details (for example where they are grouped together under a heading such as ‘stockbrokers’) will not be inducements. They will be sources of information. Were they to be presented in a promotional manner or accompanied by promotional material they would be capable of being inducements. Even so, they may merely be inducements to make contact with the listed person. Specialist directories such as ones providing
Encouraging (or discouraging) statements may be made by a company director. These will typically be made in reports or accounts or at a presentation or road show or during a briefing of analysts. Alternatively, such statements may be made on the company’s behalf by its public relations adviser. Statements of fact about a company’s performance or activities will not, themselves, be inducements to engage in investment activity even if they may lead persons to decide to buy or sell
These will be advertisements that contain encouragement to contact the advertiser. They are likely to be inducements to do business with him or to get more information from him. If so, they will be inducements to engage in investment activity if they seek to persuade or incite persons to buy or sell investments or to get investment services. See PERG 8.4.7 G for more guidance on preliminary communications and whether they are a significant step in the chain of events which are
Things such as help-lines for persons who wish to make an investment will not usually involve invitations or inducements to engage in investment activity. This is where their purpose is merely to explain or offer guidance on how to invest or to accept an offer. In such cases, the investor will already have decided to invest and there will be no element of persuasion on the part of the person giving the explanation or guidance.
There may be examples of capital instruments that, although based on a standard form, contain structural features that make the rules in this section difficult to apply. In such circumstances, a firm may seek individual guidance on the application of those rules to the capital instrument in question. See SUP 9 (Individual guidance) for the process to be followed when seeking individual guidance.
Debt instruments containing embedded options, e.g. issues containing options for the interest rate after the step-up to be at a margin over the higher of two (or more) reference rates, or for the interest rate in the previous period to act as a floor, may affect the funding costs of the borrower and imply a step-up. In such circumstances, a firm may wish to seek individual guidance on the application of the rules relating to step-ups to the capital instrument in question. See
(1) This paragraph gives guidance on how the calculation under GENPRU 2.2.214R (1) should be carried out where an insurance undertaking is accounted for using the embedded value method.(2) On acquisition, any "goodwill" element (that is, the difference between the acquisition value according to the embedded value method and the actual investment) should be deducted from tier one capital resources.(3) The embedded value should be deducted from the total of tier one capital resources
This chapter provides assistance in determining whether or not behaviour amounts to market abuse. It also forms part of the UK's implementation of the Market Abuse Directive (including its EU implementing legislation, that is Directive 2003/124/EC, Directive 2003/125/EC, Regulation 2273/2003 and Directive 2004/72/EC). It is therefore likely to be helpful to persons who:(1) want to avoid engaging in market abuseor to avoid requiring or encouraging another to do so; or(2) want to